Wednesday, September 30, 2015

Socialism/Economics...Thoughts today....

I do not think socialism is a viable economic system for
America—especially not right now! If we consider the demographics of America at
present I just don’t see how it will work. The U.S. presidential candidate Bernie
Sanders embraces democratic socialism and seems to highly appreciate the kind
of socialism that exists in Scandinavian countries.

I am American and have spent some time traveling (and
living) in different regions of the United-States. I traveled to Norway a year
ago and had the opportunity to wander through a variety of Norwegian cities
from the southern tip of Norway to the northern tip. The cities that my husband
and I visisted included: Bergen, Alesund, Valdal, Molde, Trondheim, Bode,
Rorvik, Narvik, Ornes, Narvik and Tromso. We spent a lot of time walking all
around these cities. We also briefly spent time in Oslo, but only at the
luxurious airport—perhaps the most opulent I have seen—it has real hard-wood
floors! We gained a bird’s eye—big picture—look of this country and can attest
that the demographics of Norway are much different than those found in
the United-States.

One of the first things you will notice about Norway is its
homogeneity of culture and ethnicity. Almost every person who you walk by is a
blonde-haired, fair-skinned Norwegian. Another thing that makes Norway
different from the United-States is its population. Norway has a much, much
smaller population than the United-States. While in Norway, we encountered
very, very few immigrants from developing nations and not very many from other
wealthier nations in Europe either.

One thing that almost
came as a shock for us was the hotel housekeepers. At every single hotel that we stayed at the
housekeepers were young, college-age Norwegian women. This was a site we had
never seen before!I am no longer
under the persuasion that ONLY immigrants from poor nations would be willing to
“do certain kinds of physically demanding jobs”. Citizens, within their own
countries who need work will indeed take these kinds of labor and housekeeping
jobs if they are available.

The crime rate in Norway (likely due to the small population
size) is very low while the crime rate in the United-States is comparatively
high.

I think that a socialist economic system in the US would
ultimately lead to its collapse. There are just too many people in the U.S.
There is too much crime in the US. Also, there are too many people in the US
who are not working and/or contributing to the economic system. An economic system where there are so many
people taking from the system is not going to last very long.

Yes, I do agree that extremely wealthy individuals in America
should be taxed highly and this money should be distributed to individuals who
are disabled, sick or otherwise unfit to work. However, I am hesitant about the
idea of taxing the rich. I do not think that individuals who are successful in
their creative/inventive, academic or business adventures should be punished. There
should be some sort of a reward to working hard in a career or business
venture. However, if you are just receiving donations or if you simply won the
lottery—you should be taxed in a higher tax bracket and this money should be
distributed to poor people who are disabled or veterans—what are you
contributing to society by asking for donations or by out of luck “winning the
lottery”?

A capitalist system is imperfect but so is a socialistic
system. Practically speaking, people
appear to be highly motivated by the idea of acquiring money. If you think this
is false, then please explain why so many people make an effort every month (or
week) to buy lottery tickets. Why do they do this? Why is so much time and
money spent towards this? It is because people are motivated by the idea of
wealth attainment. Yes, you might say “Well, people are actually motivated by the idea of easy wealth attainment”. Yes, this is true—but it is still wealth
attainment nonetheless.

Behavior is the best
indicator of what people are motivated by. Some people make diligent,
consistent efforts to buy lottery tickets. Others dedicate a good portion of
their time to starting a business or attending college in pursuit of a specific
career path that will ultimately yield better financial prospects for their
future. Still, others do the best they can in whatever sector they find.

Like sex, people like
money. This is an undeniable fact. A socialistic system is an idealistic
system but it isn’t practical and it doesn’t take into account the psychology
of human beings. If you see that human beings are motivated by money and also that without
the reward of money, that simply being given it—they will have a disposition to
be lazy—then capitalism is the more economically feasible option.

In almost every capacity people seem to be highly motivated
by just the idea of wealth acquisition. We can see this with youtube. Youtube
creators slowly become big and the money they make through adsense revenue and
donations from their viewers encourages them to keep on making videos.

One area of society that I see no problem taxing highly is
in the area of entertainment. Superstars
like Tom Cruise, Snooki and other actors, actresses and pop-star musicians who
render nothing to society’s progression should be put in the highest tax
bracket possible. These individuals come a dime a dozen. The only thing
required in the industry of entertainment is youth and/or looks. Acting skills
are important too, but once a woman passes her prime she is no longer in
demand--unless she is an extremely talented actress. I hate to be blunt, but that’s
it. We all know it. Where is Catherine Zeta Jones now? Where is she?

Instead, we should be placing more importance on individuals
who are contributing to the welfare of society—educators, college professors,
doctors, engineers, scientists, inventors and comedians. We need a meritocracy. We need a society where the people who
contribute the most earn the most. If a person is incapable of contributing—well,
it does suck to be them. Socialism
places (near) equivalent importance on every vocation—whether janitor or
doctor. According to this view, who is to say that a doctor is significantly
more valuable than a janitor? Sure, a
doctor will still earn more than a janitor, but not significantly more. In a capitalist system, a doctor earns significantly
more than a janitor.

My opinion is that we need an economic system that rewards
individuals who are the major contributors to the advancement of society. May
the best ideas win and may they be richly rewarded!

(This will have to be a multi-part reply as comments are limited in size.)

Yes, I disagree, but mostly I was surprised that your views seem so inconsistent with your own previously-expressed beliefs. Let me take your points individually before providing some counter-evidence.

'While in Norway, we encountered very, very few immigrants from developing nations and not very many from other wealthier nations in Europe either.'

I'm not sure what this has to do with socialism vs capitalism, etc. However, I can assure you that Norway does accept refugees - in fact, I've worked with a Norwegian exchange student who originally came to Norway as a refugee from civil war in central Africa. And there's no real reason for people to migrate from other wealthier European nations - they already have plenty of economic opportunities in those 'socialistic' wealthy nations, so that doesn't support your argument.

'At every single hotel that we stayed at the housekeepers were young, college-age Norwegian women. This was a site we had never seen before! I am no longer under the persuasion that ONLY immigrants from poor nations would be willing to “do certain kinds of physically demanding jobs”. '

Well, yes. Is this a bad thing?

The difference you've seen just indicates that a reasonable minimum hourly wage provides good part-time employment for students as well as full-time workers. Isn't that a good thing? It's certainly better than relying on illegal foreign workers who are unable to complain about poor safety and conditions or lower-than-award conditions.

'The crime rate in Norway (likely due to the small population size) is very low while the crime rate in the United-States is comparatively high. '

'I think that a socialist economic system in the US would ultimately lead to its collapse. '

I think you are confusing socialism with communism. In practice, Norway is neither, anyway - it's a mixed economy, like much of Europe. It has done particularly well through its share of the North Sea oil developments.

'There are just too many people in the U.S.'

The number of people doesn't affect the applicability of a system of government or economic management.

'There is too much crime in the US.'

See above. Crime - particularly theft and drug use, but also street violence - is a result of the stresses of poverty. Reduce that, and you'd reduce crime.

'However, I am hesitant about the idea of taxing the rich. I do not think that individuals who are successful in their creative/inventive, academic or business adventures should be punished. '

OK, here's the unpalatable truth: most extremely rich people haven't worked particularly hard or been creative, inventive, etc. Rather, they've used the money they inherited to acquire income-producing or capital-appreciating assets - real property such as rental properties, commercial property, etc. or business investments either by direct ownership or investment. As a consequence, they're in a positive feedback loop - the more money they have, the more they can make, and now they have even more, and . . . For a full and highly comprehensive treatment of this, see Thomas Piketty's book "Capital in the Twenty-First Century (www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/067443000X/).

The result is rising income inequality, and it's worst in the US, which has seen the Middle Class decline and the growth of the Working Poor. For a short but persuasive treatment, see John Oliver's Last Week Tonight Segment on the wealth gap at https://www.youtube.com/watch?v=LfgSEwjAeno As Oliver points out, the American Dream is now just a fantasy.

'Practically speaking, people appear to be highly motivated by the idea of acquiring money. If you think this is false, then please explain why so many people make an effort every month (or week) to buy lottery tickets.'

Oh, that's easy - it's an excuse for a brief daydream, to help deal with the daily reality. If you want to understand motivation, see Maslow's Hierarchy (https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs). It starts with the basics of safety (food and shelter), and for a lot of people their top concern is getting enough money to provide those. But the research shows that once people have enough money to provide a comfortable standard of living - I forget the exact amount, but it's around $US80,000 or so, enough for a nice house, car, annual vacation, etc. - people *stop* being motivated by money.

The ones who keep working on inventions, business-building, etc. do it because they enjoy what they are doing. In essence, they've achieved the level of self-actualization in Maslow's Hierarchy. However, many others, having achieved a level of financial security and comfort, turn to other ways of self-actualization, including social service, charity work, etc.

'One area of society that I see no problem taxing highly is in the area of entertainment. [...] The only thing required in the industry of entertainment is youth and/or looks. Acting skills are important too, but once a woman passes her prime she is no longer in demand--unless she is an extremely talented actress.'

Actually, it is a generally-accepted principle in international taxation that entertainers have highly-variable income streams - in essence, they sometimes get lucky and have good years, while the following years might have slim pickings. So most jurisdictions allow entertainment income to be deferred or spread over several years.

'If you see that human beings are motivated by money and also that without the reward of money, that simply being given it—they will have a disposition to be lazy—then capitalism is the more economically feasible option. '

This simply isn't true. The figures clearly show that in countries that have a higher level of social security - unemployment benefits, healthcare, etc. - those who claim unemployment do so for a shorter period of time. In addition, those countries have higher levels of innovation and entrepreneurial activity, as people are less averse to taking the risk of losing - they simply can't fall that far. Finally, free or low-cost education also is a major contributor to higher standard of living, lower unemployment and higher productivity, and hence lower government spending and lower taxation.

But you already know that people aren't all greedy (did you edit your post? I was sure you'd said that but I can't find it). I'm pretty sure that you've previously posted about Sam Harris and "The Moral Landscape" and you understand the neurological and hormonal basis for empathy and altruism, i.e. the effects of oxytocin, maternal and in-group bonding, etc. In practice, you know that we do good turns for others because it makes us feel good, and you definitely know that that's preferable to doing good because of threats from an imaginary sky fairy.

In addition, the last decade has produced results in both game theory and evolutionary psychology that show that cooperation often works better for us than competition. And we've seen that borne out in the high-tech world where highly competitive near-monoplies like Microsoft have been relegated to also-ran status by the production of open-source software projects like Linux, Apache, etc.

It turns out that, sometimes, competition is good for the consumer and for society - it stimulates innovation, drives prices down, etc. But equally, there are times when competition is completely pointless - for example, there's no point in having two parallel roads between the same locations. And when there's no role for competition, companies exercising monopoly powers will drive prices higher, introducing friction into financial systems.

What we have seen in recent years is a plateau in consumerism; we already have a TV set in darn near every room, a car for every adult in the household, etc. so growth has plateaued. Companies have therefore turned their attention to supplying services to government - hence private prisons, private contractors providing government services, etc. As a society, we want these services to fulfil some social good, but companies have no way of balancing the social good against shareholder return, so almost inevitably they cut costs, fail to provide the required service in terms of quality, timeliness, etc. and also increase the price to government. The result is huge profits for shareholders at the expense of everyone else.

A final example. Between 2007 and 2013, Australia had what you would call a "socialist" government. When the Global Financial Crisis struck in 2008, the government introduced a stimulus package, to increase government spending in education (especially building works), infrastructure construction and the building of a national broadband network. By 2011, Australia had the world's best-performing economy, the highest median income level, and a high level of both business and consumer confidence.

In 2013 an extremely right-wing government won and brought in what was, essentially, a Tea Party platform of economic reform. Taxation on mining companies was reduced, our nascent carbon emissions trading scheme was scrapped, government spending was slashed, the broadband network was crippled, thousands of public servants were laid off, social services were cut, young people were told they would not be able to claim unemployment benefits until they had been out of work for months, and plans were introduced to make tertiary education much more expensive.

Two years later, the Australian economy is basically in the toilet. Unemployment is up, the national deficit is up, exports are down, our trade balance is frightening and both business and consumer confidence have plummetted. It got so bad that the ruling political party rolled their own Prime Minister (and the Treasurer) and elected someone with a bit more economic savvy in an attempt to restore their chances at next year's election.

In short, Australia lurched to the Right - in the direction of the capitalism you're espousing - and it's been a disaster. We are now in the honeymoon phase with the new PM, and having a "national conversation" while he tries to figure out how to ditch the extreme right-wingers and get Australia back to the sensible path of a mixed economy. It's been a convincing experimental demonstration of how bad the capitalist system can be.

Thank you for your extensive thoughts and facts here. Lots to consider for sure and I appreciate the information you provided. I realize this subject is probably much too complicated for me. But this is something that I'm very interested in and I want to learn more about it so I will try and look into some of what you mentioned here. But yes, I do agree with you that Norway has a mixed economic system--and America does too, to an extent. I think that Bernie Sander's economic proposal would make things worse for America though--given the number of people who immigrate to America and do depend on the system to help support them. Anyways, thank you! I have a lot to research here.

Yes - I realised afterwards that "greedy" was in AJ Blogger's comment, not your post. I think the argument still stands, though - people mostly aren't greedy, especially after the basics of life have been taken care of.

Even though there are economic and political reasons why Communist Revolutions (the hardcode application of socialist economic systems) work only in theory, I believe the main reason is the assumption that humans are NOT greedy, always look for the common good, and are always motivated. In contrast, Milton Friedman once said very accurately, paraphrasing, "Capitalism works because we are greedy; even when we all reject been called greedy".

Lately, I have noticed more an more unrest from sectors of the society against the Corporatism and the political will that empowers it, existent in the United States and in other industrialized countries as well. Nobody really expects to be equal in a capitalist society; even though Capitalistic societies are sustained thanks to the very "equal" rich-wannabes. But more and more people seem to be getting the notion that this present gap between the 1% and the rest is getting to really obscene levels. Previous Communist Revolutions in history were a response to the monarchies, bourgeoisie, and feudalism. These elites were the 1% back then. History repeats itself but it is not the solution either.

What is ethical about all this? To answer that, first, I would start defining in what socio-economic class we are and then, in which we would like to be.

This is not going to add much to the argument as a whole but just to add to the part about movie actors. For the record, while Catherine Zeta Jones is not seen as often then say a decade ago, she still does work (she has two movie to be release in 2016). She's not presented as the "it" girl of the moment (sorry to sound objective but that's Hollywood and the media).

Yes, youth is a major factor on how Hollywood, but not the only one. I can't remember who was interviewed on an NPR show but she said that: "Yes their are roles for women in their older years. As long as your not a forty year old trying to play a twenty year old."

Also, it should be noted that some actress get deals like make-up advertisers, clothing lines, etc, that give them loads of money. Some take time off after huge successes for family time and take their time finding new roles.

So yeah, your right on the youth being a factor on how Hollywood markets actors and actress. But in the Catherine Zeta Jones, she is the result of a fully sucessful actress (and for someone in her 40s, she stills looks great). Younger acrtesses and actors could have great success, but depending on the bases of their success may affect future roles (real acting ability will help).

But, the reason actors and actresses make all that money is because, we seek entertainment as well. Ergo we throw money at the things we are entertained by. To bad we could not do that for teachers.